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Cape Town - Emerging markets are where investors should focus their energies to secure a place in the next wave of growth in technology companies, an industry insider insists.

"Ten years ago, I couldn't say 'I was global' if I wasn't in Europe and the US, but that's changing - and has changed now," Kresten Buch, managing director of 88mph told News24.

The incubator has a South African office in Cape Town and funds technology start-ups with up to $100 000 and up in exchange for an equity stake of at least 10%.

In the 2013 round of start-ups, one has hit the jackpot in terms of returning investment.

Apex Peak raised $2.4m after seed funding from the incubator. The start-up has moved to Singapore to secure a second round of funding.

Revenue

Apex Peak facilitates short term capital for businesses through trading a firm's outstanding invoices to investors.

Buch said that despite the attention from big firms on the US and Europe, developing markets like Africa, Latin America and Asia has a bigger market share in terms of the number of people accessing the internet.

Tech start-ups work on their projects at the 88mph incubator. (Duncan Alfreds, News24)

China alone has an internet population of 500 million people, more than double that of the US and in Africa, Nigeria leads with over 50 million internet users.

"Emerging markets - that includes India, Africa, Indonesia – that’s a massive market. So if you look at the emerging markets, it’s very big and it doesn't have the same competition as if you would have if you want to go to the US and Europe," said Buch.

88mph, though, is no charity and start-ups are selected based on the usefulness of an application, potential profitability as well as its ability to scale to an audience.

The incubator selected seven start-ups in SA for 2014, including several that focus their applications on business to business revenue, in a diverse group.

Mark Raa founded diarize.me which helps service orientated businesses manage appointments and Courtney Farquharson founded Pet Heaven which aims to provide deliveries of pet food and accessories.

Focus

"Emerging markets are much bigger in terms of connections than the US and Europe. It depends on what you define as global. I think it's a fail just looking at the US," said Buch.

He said that products should be focused on developing markets because competing with Silicon Valley was extremely difficult from SA, Nigeria or even China.

"Even if you have a product that is say, developed market, I would still look at Asia rather than the US because it's very hard to compete with US start-ups from here."

He said that the established networks and capital was far more organised in the US than in SA.

"You can raise a hundred times more money; the investors getting in will have ten times better networks in the US than you can get here."

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